The hospitality industry in the Middle East is booming, at least in terms of construction, as regional developers continue to launch major hotel projects ranging from mid-market offerings to five-star luxury resorts.

But amid forecasts that the Middle East’s hospitality pipeline will hit 158,950 rooms, spread across 541 hotels, by 2020, occupancy rates have witnessed a slight decline during recent years.

Hospitality markets across the Middle East and North Africa (MENA) region recorded a softer-than-anticipated performance in H1 2017, compared to the corresponding period of last year, according to the latest Benchmark - Middle East hotel benchmark survey report from EY.

Nevertheless, a host of major property developers, including Emaar, Damac, Sobha, and Deyaar, have been pushing ahead with large-scale hospitality projects of late.

Earlier this year, Emaar Properties announced plans to launch six new hospitality projects in the UAE, Egypt, and Bahrain. In fact, the Dubai-headquartered developer launched an additional hotel project just a few weeks ago, with the announcement of Vida Dubai Mall.

This project represents the tenth planned hotel under Emaar’s Vida Hotels and Resorts brand, with developments in both the UAE and international markets.

And Emaar is by no means the only developer to target the hospitality segment. Sobha Group, for example, has launched a new flagship hotel within its Sobha Hartland mega-development, which is situated in Dubai’s Mohammed bin Rashid City (MBR City).

Meanwhile, Deyaar is close to completing its mixed-use, three-tower Mont Rose development in Dubai’s Al Barsha area, which will include two residential towers and one hotel apartment building.

Spurred on by targets set out in Saudi Vision 2030 and related diversification efforts, developers in neighbouring Saudi Arabia have also joined the fore, exploding onto the scene with a plethora of high-profile hospitality projects during the past year. The kingdom is planning to open a record 68 new hotels, comprising 29,033 guestrooms, during the course of this year, according to a report published by Tophotelprojects.

Yet the slowdown reported by EY’s analysts is expected to continue throughout 2017. Yousef Wahbah, MENA head of transaction real estate at EY, noted that difficult global and regional economic conditions have precipitated more conservative spending plans among both public and private sector entities – not to mention regional tourists. And it seems that the potential of oversupply is not helping matters.

“An increase in supply in some of the markets like [Saudi Arabia and the UAE] has also contributed to a drop in the performance [of the sector,]” said Wahbah. “The summer months, which are typically seen as the low season in the majority of MENA hospitality markets, are expected to experience lower occupancy and room rates compared to the first half of the year.”

However, Wahbah also pointed out that from September, the region’s hospitality market is likely to witness an uptick in some cities, due to the Hajj pilgrimage, a packed calendar of global forums, and numerous opportunities for long weekends offered by upcoming public holidays.

Ultimately, with 189 regional hotels expected to open their doors in 2017, it remains to be seen whether the sector is overreaching, or if the time-honoured adage of ‘if you build it, they will come’ will hold true.